How to Start a Carwash: Self-financing

Six tips to self-finance a new business.

When launching a new business, one of the first crucial factors needed to get the business going is finances. How are you going to secure the investments needed to jump-start your business? Are you going to need loans, investors, partners, etc.?

For some entrepreneurs, avoiding a little financial push from an outside source is the most appealing option.

In the article “6 Tips on How to Self-Finance Your Startup,” featured on Inc.’s website, contributor Christina Desmarais discusses how startups can successfully self-finance.

In the article, Desmarais shares advice from Jeremy Miller, cofounder and CEO of Label, a custom clothing company, on six ways to self-finance a startup:

Be an expert. Know your industry inside and out when starting a new business. “You have to understand what you’re getting into — what is the business, what is the industry, who are the competitors, [etc.],” explains Miller in the article.

Overestimate capital. Most, if not all, new businesses will need more money than originally anticipated “to become cash flow positive” because of unanticipated expenses.

Be resourceful. Be willing to do any type of task needed to get your new business moving in the right direction. “Unlike a deep-pocketed corporation, running a bootstrapped startup means your team members will need to do cross-functional work and nail the art of resourcefulness,” writes Desmarais in the article.

Invest in people. Everyone on your team must have passion and possess the skills that you lack. If you cannot afford to pay them right away, Desmarais recommends in the article to offer them an alternative form of compensation, such as stock options.

Reinvest profits. You may want to plan to defer your salary even after your business starts earning profit. That money can be used to grow and pay any expenses in the months to come. “Think of your business as a savings account,” asserts Miller in the article. “People always say [to] ‘save six months’ worth of expenses in case you lose your job one day,’ and you need to treat your business the same way.”

Don’t fear the unknown. Taking risks is a part of being an entrepreneur. “You just have to go all-in,” notes Miller in the article. “And obviously it’s called ‘calculated risk’ for a reason because you have to measure the downside and the upside.”